The Schwartz Report

Citrix and Microsoft's Relationship Just Became Cozier

Citrix and Microsoft have worked closely together for 25 years. At one point in the late 1990s, Microsoft even bailed Citrix out with a cash infusion and investment that kept the company going. While Citrix has carved its own niche in desktop virtualization ever since and the two companies have worked closely together, now they have extended their partnership in a new and potentially meaningful way.

The two companies described their latest pairing, announced at this week's annual Citrix Synergy conference in Las Vegas, as their most significant to date. It's the most extensive partnership in terms of the number of offerings involved from both companies and the level of engineering that has, or will take place.

The announcement comes three months after Kirill Tatarinov, a longtime top executive at Microsoft, took the helm as president and CEO of Citrix. Tatarinov arrived amid activist investor Elliot Management pushing for changes -- ostensibly growth for the company, which has invested heavily in engineering but not yielded payback. Tatarinov has remained largely silent since taking over in January. At Synergy, Citrix refreshed its entire product line and Tatarinov said "we're all in the cloud," adding that the company's entire portfolio will be cloud focused over the coming months. Clearly, Microsoft is going to be a key enabler of its accelerated push to the cloud, a statement of direction Citrix has made last year when saying its new Workspace Cloud, which it has since renamed Citrix Cloud, would use Azure as its control plane.

The new pact, revealed by Tatarinov in the opening keynote session at Synergy, identifies Microsoft Azure as its strategic cloud for delivering on Citrix imperative of cloud enabling all of its offerings. The new partnership also covers Office 365, Enterprise Mobility Suite (EMS) and Windows 10 Enterprise migrations and deployments. On Citrix's end, it also covers a broad swath of its portfolio, including the Xen desktop and app offerings, AppDNA, the company's app migration tool; NetScaler, its application-aware load balancing controller and gateway; and ShareFile, Citrix's file storage and synchronization platform.

"We are taking our relationship to the next level," Tatarinov said in his keynote. By identifying Azure as its cloud of choice to deliver its own services, Tatarinov emphasized Citrix will continue to support multiple cloud services. The company has enabled customers, for example, to run their Citrix infrastructure in the Amazon Web Services cloud, though on a self- or partner-managed basis. Citrix offerings are also available as managed services by various hosting partners. "Our job is to give customers choice and enable them to run Citrix from any cloud they choose," Tatarinov said in a press briefing following the keynote. "It's only logical for those who are deploying Office 365, Windows 10 powered from XenApp and Xen Desktop, for those Microsoft customers to expect those capabilities to come from the Azure cloud."

The portion of the partnership that drew the largest applause was that Citrix will offer customers who have licensed Windows 10 Enterprise (Microsoft's Current Branch for Business) the option of managing their Windows 10 images on Azure via XenDesktop without having to pay an additional license fee. It's the first time Microsoft has permitted this capability. Delivered as a service, it'll include the ability to use Citrix AppDNA migration tool and deploy virtual desktops or apps.

"This is an industry first, it's the first time we announced the ability for a Windows client to be hosted in a public shared cloud," said Brad Anderson, Microsoft corporate VP for enterprise and client mobility, who was joined by Bill Burly, VP and general manager of Citrix's Workspace Services Business unit, on stage in Wednesday's keynote session. "It's a big, big deal for the industry. I really think this Windows 10 VDI service on Azure is going to open doors up. People are dying to take advantage of the Azure power to deliver VDI."

Anderson noted that this is not just a licensing agreement -- the two companies have worked on technical integration for nearly a year. "I love the integration that's happened where XenApp apps can now be hosted in Config Manager, which [manages] 70 percent of the world's Windows devices," Anderson said. "It's the tool that everybody is using to upgrade to Windows 10 and now XenApp just fits inside, and you can publish all apps of all sizes in that Config Manager console and in one console you see everything."

On the Office 365 side, Citrix will now enable it to run in XenApp and XenDesktop environments. Xen users will be able to run macros and plug-ins as well as run Skype for Business with what Citrix officials described as "dial-tone" service.

On the enterprise mobility management side, the two companies are competitors and collaborators. Both companies offer their own enterprise mobility and management suite, though Anderson argues Microsoft's EMS, which includes Intune, Azure Active Directory and Rights Management Service. Citrix XenMobile and NetScaler will support Microsoft's mobility management tool.

"Netscaler is going to EMS-enabled," Anderson said. "What that means is as EMS-managed apps devices, come though NetScaler at the perimeter, NetScaler is going to interact with EMS services, and we'll be able to force initial access based upon the policies that are set by EMS. Literally every EMS customer can also be a NetScaler customer."

The two companies are also taking Citrix NetScaler capabilities and integrating that into the MAM SDK of Microsoft's EMS. That will allow any app inline with the SDK will be able to connect with on-premises apps, according to Anderson. And Citrix is going to build its own new enterprise mobility service that'll run on Azure but offered as a Citrix service. The two companies competing mobility offerings will interoperate with each other, Anderson said. "Citrix will bring all of their experience in security compliance, especially these highly regulated businesses, and we'll do all that work in the cloud and apply that," he said.

Time will tell whether these moves merely help Citrix hold on to its existing customers or help grow the business. "All of the technology stuff makes sense. The big question to me is how will they execute together on that," said Enterprise Strategy Group Analyst Mark Bowker. "There's gaps in Citrix's portfolio, such as identity and access management. Microsoft can help clearly help fill in that gap."

Investors and customers will be watching closely whether Microsoft can give Citrix the pull it needs to grow its business again.

Microsoft updated an August security advisory this week to urge organizations using the Lightweight Directory Access Protocol in supported Windows systems to implement some configuration changes manually.